What's the Equivalent of Cash Out Refinance?

Home owners levered up, took, you know, cash out refinancing and re levered. So this is like the dividence that the regulators are allowing banks to keep paying, even though they live on pathetically low equity levels. We just don't know it, because accounting disclosures don't really show you. O how should we fix this? What should banks and financial institutions be doing differently? How should we change the tax code and the regulatory unit?